Google Antitrust Scrutiny Mounts in Europe

By Aoife White -
May 7, 2012

The European Union’s antitrust chief
used to say he’d decide on the future of his probe into Google
Inc. (GOOG) by April. Joaquin Almunia, who can fine companies as much
as 10 percent of annual sales, now says he’s not in so much of a
hurry.

There aren’t any “fixed deadlines” to assess allegations
that the world’s largest search-engine operator discriminated
against rivals in its search results, he said on May 4.

Almunia may consider a flurry of last-minute complaints and
must appoint a new head of the EU team investigating Google as
he prepares to reach initial conclusions on whether it broke
antitrust rules. The U.S. Federal Trade Commission and antitrust
agencies in Argentina and South Korea are also scrutinizing the
Mountain View, California-based company.

“With complainants continuing to appear, Google defending
itself madly and no one competitor or third party about to
disappear, it’s not at all surprising that the European
Commission is keeping its powder dry for now,” said Matthew
Hall, a lawyer at McGuireWoods LLP in Brussels. “A few months
here or there makes no difference.”

Google’s “size and success rightly generate scrutiny,
which is why we’ve worked hard to explain how our business
works, cooperating with the European Commission since this
investigation began,” said Al Verney, a Brussels-based
spokesman for the company. “Because there’s always room for
improvement, we’re happy to discuss any concerns the commission
might have.”

‘Bigger Issue’

Four additional sets of allegations were filed with the EU
in March and April, Google said in a regulatory filing last
month. These came from Odigeo, a Barcelona, Spain-based travel
company owned by AXA Private Equity and Permira Advisers LLP,
online travel websites Expedia Inc. (EXPE) and TripAdvisor Inc. (TRIP), as
well as Streetmap, a British mapping service.

The new objections are unlikely to “bring anything new to
the table,” said Gabriele Accardo, a lawyer at Dandria Studio
Legale in Rome. A bigger issue for the investigation, according
to Accardo, is its complexity and the emergence of new channels
such as Facebook Inc. and other social media services.

The latest complaints to the EU come on top of ones from
companies including Microsoft Corp., the world’s biggest
software maker, that Google’s search hampers rivals by promoting
its own services in search results above rival offerings.

Microsoft, Intel Probes

EU regulators in 2010 started investigating claims that
Google discriminated against other services and stopped some
websites from accepting rival ads.

The commission’s investigation will also lose Per
Hellstroem, the head of the EU antitrust unit on Internet issues
and a veteran of the regulator’s legal clashes with two other
U.S. technology giants, Microsoft (MSFT) and Intel Corp.

Intel was ordered to pay 1.06 billion euros ($1.4 billion)
by the EU in 2009, the regulator’s biggest ever antitrust fine
and more than double the 497 million-euro penalty against
Microsoft in 2004.

The Swede will leave the investigators’ team in June to
join a unit handling energy mergers, according to Antoine
Colombani, a spokesman for the regulator.

Hellstroem’s replacement hasn’t yet been appointed and
Colombani didn’t specify the reasons for the move. Senior staff
at the commission are required to regularly move between posts.

The Google dossier may also be delayed slightly if “the
new ‘tech guy’ needs to be brought up to speed,” said Accardo.

‘Lightning Speed’

Almunia has said regulators need to assess whether Google
can hold an entrenched position “in a market that is changing
at lightning speed” and whether it is a “gate keeper” that
can influence Internet users’ behavior. The EU also needs to
consider Google’s “two-sided platform where advertisers’ fees
finance a service that users do not have to pay for.”

While Microsoft and partner Yahoo! Inc. (YHOO) have about a
quarter of the U.S. Web-search market, Google has almost 95
percent of the traffic in Europe, Microsoft said in a blog post
last year, citing data from regulators.

“It’s hard to assess dominance in such fast-moving
markets,” Accardo said. “Any decision in this case will shape
the future approach in Europe and the European Commission cannot
afford to make a mistake.”